Recent media hits for EBRI's national 401(k) projection model

Newspapers:

Washington Post (10/8/08) - "Retirement Savings Lose $2 Trillion in 15 Months"

Wichita Eagle (10/8/08) - "401(k)s, Pension Funds Lose $2 Trillion"

Seattle Times (10/8/08) - "Market Losses Take $2 Trillion Out of Retirement Savings"

San Diego Union Tribune (10/10/08) - "Retirement Hopes Deflate in Tumble"

Wall Street Journal (10/11/08) - "Crisis on Wall Street: Statement Shock Hits 401(k)s"

Washington Post (10/12/08) - "Retirement Wreck: Are 401(k)s Still Viable for Saving?"

Charleston Daily Mail (10/13/08) - "Market Swings Affect 401(k)s"

Boston Herald (10/19/08) - "Baby Boomers Go Bust As Retirement Savings Tank"

Providence Journal (10/22/08) - "Slide in Stocks Means Baby Boomers Have Lost a Big Chunk of Their Nest Egg"

Austin American-Statesman (10/26/08) - "Financial Chaos Undermines Security of 401(k) Plans"

Wall Street Journal (11/3/08) - "Investing in Funds: A Monthly Analysis - Financial Crisis Highlights Shortcomings of 401(k) Plans"

The Memphis Daily News (11/4/08) - "Meltdown Highlights Shortcomings of 401(k) Plans"

Fort Worth Star Telegram (11/9/08) - "Is the 401(k) a Failed Experiment?"

Los Angeles Times (11/16/08) - "Calls Grow to Overhaul 401(k) Retirement Plans"

Harrisonburg Daily News Record (12/29/08) - "401(k) Holders Advised to Sit Tight, Hold On"

Wall Street Journal (1/8/09) - "Big Slide in 401(k)s Spurs Calls for Change"

The Oregonian (1/10/09) - "What To Do When the Nest Egg Cracks"

News Service:

Reuters (1/22/09) - "US Lawmakers to Mull Reforms for Shrunken 401(k)s": This article appeared in guardian.co.uk (1/22/09); Alibaba.com

Periodicals:

U.S. News & World Report (10/8/08) - "Retirement Savers Lost $2 Trillion in the Stock Market"

Forbes (10/15/08) - "Rebuilding a Scrambled Nest Egg"

Global Pensions (10/20/08) - "DC to Remain Dominant Despite Downturn"

Plan Adviser (12/2/08) - "Younger 401(k) Participants Saw Account Balance Hike in Downturn"

Web Sites:

OpEdNews.com (10/15/08) - "The Approaching 401(k) Tsunami Following the Stock Quake"

ConsumerAffairs.com (10/16/08) - "Retirement Postponed for More Americans"

CNBC.com (10/22/08) - "Managing Retirement Savings in Volatile Markets"

Bankrate.com (10/22/08) - "Managing Retirement Savings in Down Markets"

MidwestBusiness.com (11/5/08) - "Older Workers Rethinking Retirement Plans; How to Find, Keep a Job Today"

Financial News USA (11/14/08) - "Multiple Crises Sabotage Retirement Plans"

Tampabay.com (1/8/09) - "After Market Drubbing, 401(k) Reconsidered"

Retirement Savings Accumulation Boosted by PPA

http://www.planadviser.com/research/article.php/2508

Auto enrolment positive for workers

http://globalpensions.com/showPage.html?page=gp_display_news&tempPageId=803381

Retirement Savings Accumulation Positively Impacted by PPA

http://www.plansponsor.com/pi_type10/?RECORD_ID=42173

The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income

Abstract: The Pension Protection Act (PPA) of 2006 allows employers to automatically enroll workers in the company's 401(k) plan and to automatically increase a worker's 401(k) contribution to coincide with a raise or a work anniversary -- though the employee can decline both enrollment and the increase. To qualify for nondiscrimination protections, automatic (or default) contributions must be at least 3 percent in the first year and increase regularly. The provision was added in an attempt to boost 401(k) accounts, the primary vehicle for worker retirement savings. This paper uses data from the 2007 Retirement Confidence Survey (RCS), fielded several months after the enactment of PPA, which asked workers how high they would allow their default 401(k) contributions to go. The result is a first approximation for the expected impact of automatic escalation under the PPA safe harbors for a number of different assumptions about worker and employer reactions.

Keywords: 401(k) plans, Employment-based benefits, Pension plan contributions, Retirement income

JEL Classifications: D91, J26, J33

Accepted Paper Series

Suggested Citation
VanDerhei, Jack, "The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income" . EBRI Notes, Vol. 28, No. 9, September 2007 Available at SSRN: http://ssrn.com/abstract=1015547

The Impact of PPA on Retirement Savings for 401(K) Participants

Abstract: This paper simulates (under several assumptions) the likely impact of 401(k) plan sponsors switching from voluntary enrollment systems to automatic enrollment designs with automatic escalation of contributions for a significant portion of workers (not just current 401(k) participants or those eligible to participate). This analysis indicates that even under the most conservative assumptions for auto-escalation of contributions, switching 401(k) plans to auto-enrollment is likely to have a very significant positive impact in generating additional retirement savings for many workers, especially for low-income workers. When results are aggregated across all income categories, the increase in the value of 401(k) accumulations at age 65 as a multiple of final earnings for those currently ages 25-29 would be approximately 2.4 to 2.6 times final salary by switching from voluntary enrollment to automatic enrollment. Although the aggregate results favor automatic enrollment, distributional analysis of the differences between the two systems indicates that the higher paid are not likely to benefit as much from such a change. The median 401(k) accumulations for the lowest-income quartile of these workers (assuming all 401(k) plans were voluntary enrollment) would only be 0.1 times final earnings at age 65 (this is largely due to the fact that 41 percent of workers - as opposed to participants - were assumed to have zero balances at age 65). However, if all 401(k) plans are assumed to be using the auto-enrollment provisions under PPA, the median 401(k) accumulations for the lowest-income quartile jumps to 2.5 times final earnings under the most conservative assumptions and 4.5 times final earnings under the most beneficial assumptions. Even for the top 25 percent of these workers (when ranked by 401(k) accumulations as a multiple of final earnings), there are large increases: the multiple under a voluntary enrollment scenario is 1.8 times final earnings, whereas auto-enrollment provides multiples ranging from 6.5 to 10.4, depending on auto-escalation of contributions. Comparing income replacement targets generated in previous EBRI work with these simulated 401(k) accumulations shows that, even with the large increases that can be expected for many workers under the safe harbor auto-enrollment plans introduced by PPA, and with current-law Social Security benefits, additional resources will still be needed for some of them.

Keywords: Employment-based benefits, Pension plan coverage, Pension plan design, Retirement income, Savings

JEL Classifications: J26, J33

Accepted Paper Series

Suggested Citation
VanDerhei, Jack and Copeland, Craig, "The Impact of PPA on Retirement Savings for 401(K) Participants" . EBRI Issue Brief No. 318 Available at SSRN: http://ssrn.com/abstract=1152392

Retirement confidence dropping dramatically: Workers finally may be waking up to retirement's realities, but they still aren't taking action to ensure

 Benefit News, June 15, 2008, 664 words, Lynn Gresham

June 2008 articles

U.S. News & World Report"Health costs after 65: ouch, even with Medicare"June 4, 2008

http://www.usnews.com/blogs/on-health-and-money/2008/6/4/health-costs-after-65-ouch-even-with-medicare.html

tbf july 2007- june 2008

EBRI survey: Only 18% foresee comfortable retirement

  Pensions and Investments, April 14, 2008, PENSION FUNDS; Pg. 42, 428 words, Doug Halonen

Retirement Worries Increase Kelly Greene. Wall Street Journal (Eastern edition). New York, N.Y.: Apr 9, 2008. p. D.3

Workers worry over retirement readiness

Workers worry over retirement readiness

By Eileen Alt Powell, AP Business Writer

401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006

Abstract: Over the past two decades, 401(k) plans have grown to be the most widespread private-sector employer-sponsored retirement plan in the United States, and now serve as the most popular defined contribution (DC) plan, representing the largest number of participants and assets. In 2006, 50 million American workers were active 401(k) plan participants. By year-end 2006, 401(k) plan assets had grown to represent 16 percent of all retirement assets, with $2.7 trillion in assets. In an ongoing collaborative effort, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) collect annual data on millions of 401(k) plan participants as a means to accurately portray how these participants manage their accounts. This paper serves as an update of EBRI and ICI's ongoing research into 401(k) plan participants' activity through year-end 2006. The report is divided into five sections: The first describes the EBRI/ICI 401(k) database; the second focuses on changes in participant account balances over time, analyzing a group of consistent 401(k) participants; the third presents a snapshot of participant account balances at year-end 2006; the fourth looks at participants' asset allocations; and the fifth looks at participants' 401(k) loan activity.

Keywords: 401(k) plans, Asset allocation, Employment-based benefits, Pension plan assets, Pension plan loans, Retirement plans, Self-directed investments

JEL Classifications: D31, G11, J26

Accepted Paper Series

Suggested Citation
VanDerhei, Jack, Holden, Sarah, Copeland, Craig and Alonso, Luis, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006" . EBRI Issue Brief, No. 308, August 2007 Available at SSRN: http://ssrn.com/abstract=1005379

Who is Ready for Retirement, How Ready, and How Can We Know?

Research Report

Sophie Korczyk, Ph.D

January 2008

Research, caution help in managing lump sum; Tips may help money last throughout life

 USA TODAY, January 28, 2008 Monday, MONEY; Pg. 10A, 1155 words, Kathy Chu

Young workers miss out on matches; Financial advisers urge twentysomethings to take advantage of employer defined contribution plans

  Investment News, February 25, 2008, NEWS; Pg. 19, 670 words, Andrew Coen

Here's your life's savings; Retiring baby boomers must figure out how to best manage a lump sum to make it last as long as they do

  USA TODAY, January 17, 2008 Thursday, MONEY; Pg. 1B, 1841 words, Kathy Chu

DREAMS ABOUT RETIRING WITHER

  St. Petersburg Times (Florida), April 9, 2008 Wednesday, BUSINESS; Pg. 1D, 642 words, HELEN HUNTLEY, Personal Finance Editor

Don't build your perch on company stock; Experts warn many 401(k)s are at risk

 USA TODAY, December 14, 2007 Friday, MONEY; Pg. 3B, 1073 words, Christine Dugas

REDRAWING THE ROUTE TO RETIREMENT

 Business Week, December 10, 2007, Personal Business -- Retirement Plans; Pg. 78, 1650 words, By Anne Tergesen